How's the Real Estate Market? Good Time to Buy or Sell?
By: Peter Wassileff
Given these differing signals, you may be wondering: How has the U.S. housing market been impacted? Where is it headed? And more importantly what does it mean for me?
MORTGAGE RATES ARE NEAR HISTORIC LOWS
Freddie Mac reported that the average 30-year fixed mortgage rate hit its lowest level since November 2016, falling to 3.6%, down a full percentage point from a year earlier. Variable mortgage rates also fell when the Federal Reserve cut interest rates. Freddie Mac predicts that low interest rates and a robust job market will help the housing market remain strong despite the threat of recession.
What does it mean for you? If you're looking to buy a home, now is a great time to lock in a low mortgage rate. If you plan to stay in your current home for a while, consider whether it makes sense to refinance your mortgage at today's lower rates.
PRICES CONTINUE TO RISE AT A MODEST PACE
According to the S&P CoreLogic Case-Shiller Indices, housing prices continue to rise. But the rate at which prices are rising is slowing down.
But what about all this talk of a recession? Will we see housing values plummet like they did in 2008? Economists say no.
If we look at history, the real estate crash experienced during the Great Recession isn't typical. Experts predict that the next recession is likely to be far less severe on the housing market than the last one. It's not that this time is different; it's that last time was really different from historic norms. A persistent housing shortage should help cushion home price declines.
What does it mean for you? If you have desire to buy a home now, don't let the threat of a recession hold you in limbo. The market is cyclical, and it will experience ups and downs. But over the long term, real estate has consistently proven to be a good investment.
STARTER INVENTORY REMAINS TIGHT WHILE LUXURY MARKET SOFTENS
As we've seen in the past, it's become a tale of two sectors.
The low-end of the market remains highly competitive as buyers compete for affordable housing. A lack of new construction during the last recession led to an undersupply of starter homes. There's a shortage of homes for sale that Americans can actually afford to buy. The luxury market, on the other hand, has softened. Economic uncertainty, changes to tax laws, and rising prices have slowed demand. Plus, to recoup their higher costs, builders flocked to this segment causing an overabundance of supply in some areas.
What does it mean for you? Move-up buyers, you're in luck! If you're ready to trade in your starter home for something more luxurious, you may get the best of both sectors. We're still witnessing strong demand for entry-level homes, giving sellers the upper hand. At the same time, buyers of high-end homes are finding a greater selection (and more negotiating power) than they've had in years.
INVESTORS ARE BUYING HOMES AT RECORD LEVELS
There's one group that hasn't been slowed down by lack of affordability or economic uncertainty:
What does it mean for you? If you're looking for a way to "recession proof" your money, you might want to consider investing in real estate. People will always need a place to live, and (unlike the stock market) a rental property can provide a steady source of cash flow during uncertain economic times.
WE'RE HERE TO GUIDE YOU
While national real estate numbers can provide a "big picture" outlook, real estate is local. As local market experts, we can guide you through the ins and outs of our market and the issues most likely to impact sales and home values in your particular neighborhood.
If you have specific questions or would like more information about how market changes could affect you, contact us. We're here to help you navigate this shifting real estate landscape.